The potential and prospects of Latin American e-commerce market development

The cross-border e-commerce market in small languages ​​has attracted much attention for a long time. Driven by the “One Belt, One Road” initiative, the small-language cross-border e-commerce market has suddenly emerged and become a huge growth point for the cross-border e-commerce market. In their predictions on emerging markets for cross-border e-commerce in the next five years, many data research institutions have repeatedly mentioned Latin America, where Spanish and Portuguese are popular. What is the charm of the Latin American market, which is favored by many cross-border e-commerce giants and sellers?

1. Latin American online shoppers are price sensitive

Different from the high-end, high-priced sales route taken by European and American products in Latin America, Chinese products are more cost-effective. Latin America is a highly price-sensitive market. When it comes to electronic products, brand name is not that important. Consumers will compare. If two mobile phones have the same functions and configurations, then the cheaper one will be very attractive to them. At present, Chinese products have a very obvious price advantage compared with many similar products in the world. If they enter the Latin American market, they will also be in a favorable position to compete with local sellers.

2. Foreign brand products are selling well online locally

The Latin American economy as a whole is dominated by the primary industry. It is rich in various resources such as oil, gold, silver and copper, and mostly grows cash crops such as soybeans and corn. However, the manufacturing industry is relatively backward. It is impossible for local retailers in Latin America to purchase a full range of products from famous brand manufacturers in large quantities without the support of market sales. It is also difficult for local retailers to obtain the latest products, which makes the replacement of local products slower (for international supply). Among international sellers, some are close to the source of goods, and some can manufacture and produce by themselves. Through cross-border e-commerce platforms, the latest products can also be circulated into the Latin American market, and Latin American consumers also have this demand.

3. The extremely tempting demographic dividend

According to the latest estimates by the United Nations, the current population of Latin America has exceeded 600 million. More importantly, the average age of the Latin American population is around 27 years old, making it one of the youngest regions in the world. Their consumption philosophy is not like China’s. They do not save money to buy a house, but are more willing to spend money to buy things they like.

4. The number of Internet users has surged

Latin America is currently the region with the fastest growing Internet population in the world. As of 2018, Latin America is the fourth largest regional online market, behind Asia, Europe and Africa. In 2018, the number of Internet users in Latin America was approximately 378 million, and the Internet penetration rate reached 60%, an increase of nearly 100 million users compared with 2013.

5. Popularization of smart phone devices

The increasing popularity of smartphones is generally considered to be one of the main driving forces for the growth of the Latin American e-commerce market. Latin American smartphone users are mainly concentrated in 6 countries: Brazil, Mexico, Colombia, Argentina, Chile and Peru. As of the end of 2018, the smartphone penetration rate in Latin America was 63%, and by 2023, this number is expected to rise to 79%.

6. Steady growth in e-commerce retail sales

In the past 10 years, middle-class incomes in Latin America have doubled, and purchasing power is growing rapidly across the region. According to monitoring data from the “Network Economic Society E-Commerce Research Center”, in 2018, online transaction volume in Latin America reached US$71.2 billion, a year-on-year increase of 15%. Cooper Smith, a senior research analyst at BI Intelligence, has analyzed the e-commerce market in Latin America and predicts that by 2021, the scale of e-commerce in Latin America will reach US$118 billion.

Although Latin America has 9% of the world’s population, its own retail market is less than 2%. Compared with e-commerce in developed countries such as Europe and the United States, the development of e-commerce in Latin America is not yet complete and remains to be developed. “Virgin territory”. Mexico’s online retail accounts for less than 5% of the country’s retail industry, and other countries, such as Chile and Peru, have e-commerce penetration rates of less than 1%.

Currently, there are only two major local e-commerce forces in Latin America: one is MercadoLibre, which has been listed on Nasdaq and is the Latin American version of “Taobao”. It has a large transaction volume but lacks control over fake goods; Linio is the Latin American version of “Tmall”. It has e-commerce websites and local customer service teams in 8 Latin American countries. Although its transaction volume is not as good as MercadoLibre, it has a sound supervision and standard system and provides high-quality and authentic supply.

In the long run, the Latin American e-commerce market has certain development potential.